Opinion & Analysis
OPINION: As anyone who's ever managed older relatives out of their homes and into assisted living can attest, there will be shenanigans.
An elderly couple in my family recently made the big decision to move into a retirement village. However, theirs is not a case of curmudgeonly oldies being forced to face the reality of their advancing years - rather, the husband half of this pair can't get there fast enough.
The responsibility of caring for their property and his increasingly frail wife has been weighing heavily upon him. No-one could argue with that, and so they went retirement village shopping.
To their family's surprise, they were signing documents within the month. Concerned about the apparent rush to jump at the first opportunity, I responded, as all good journos do, by noseying around.
My second surprise was that their options were limited.
They wanted a facility which offered continuing care should their health deteriorate, and that knocked out about half of them. They would have preferred something close to the neighbourhood they have lived in for the better part of 60 years, but with big blocks of land for building retirement villages not exactly plentiful in urban areas, they found themselves looking in far-flung parts of the region.
Furthermore, units in good facilities sell like hotcakes with waiting lists at popular villages.
I came to view my relatives' speedy action in a new light.
This huge demand has as many implications for retiring babyboomers and the investment community as it does for local and government authorities.
Waikato University demographer Natalie Jackson has been outspoken about the downstream effects of the babyboomer bubble now moving into old age. Within a mere 14 years, New Zealand's over-65s will outnumber the under-15s for the first time, she said. This has already occurred in 13 of the country's 67 district council areas.
There is going to be considerably more need for new resthomes than schools in future.
It adds up to a bonanza for those providing aged care facilities, and unsurprisingly retirement village operators Ryman Healthcare and Summerset Group featured large in brokers' traditional New Year picks of stocks to watch in 2013.
Ryman, operator of 25 villages currently and builders of an additional 700 units and aged-care beds each year, is now one of the top five companies on the NZX and was among the bourse's best performers in 2012 with a 68 per cent rise in its share price.
Summerset has just opened its 15th village and reported sales of 331 units in the year to December, up 43 per cent on the previous year and 28 per cent higher than forecast at its November 2011 stock exchange listing.
Expect more construction announcements in 2013, but with 40,000 care beds required to cater for the ageing population development needs to be stepped up, managing director Norah Barlow said.
The financial gains are all on the side of the operators and their investors. For the individual, going into a retirement village doesn't make financial sense. You don't own your unit but buy the right to occupy, with the operator typically keeping 20 to 30 per cent and any capital gains when you die or move on. You also pay village contribution fees of around $100 a week.
But these places are like retiree holiday camps, with swimming pools, petanque courts, bowling greens and movie theatres, and clearly there are plenty of older New Zealanders prepared to pay for the lifestyle, social aspects and peace of mind.
Of course, they aren't for everyone. My mother is far from persuaded by their charms - all those old people arguing about who parked in whose car park, she said. And some Kiwis will simply never be able to afford one.
But if retirement village living is your thing, you need to make that decision earlier than you might think to give yourself as many options as possible.
For everyone else, buying shares in a retirement village operator may be a better option.
- Maria Slade is morning editor for the Fairfax Business Bureau. firstname.lastname@example.org